Testimony 

Before the Committee on Government 

Reform, House of Representatives

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Thursday, May 6, 2004 DOD PERSONNEL 

CLEARANCES 

Preliminary Observations 

Related to Backlogs and 

Delays in Determining 

Security Clearance 

Eligibility for Industry 

Personnel 

Statement of Gregory C. Wilshusen, Acting Director 

Defense Capabilities and Management 

GAO-04-202T 
www.gao.gov/cgi-bin/getrpt?GAO-04-202T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gregory 

Wilshusen at (202) 512-6244 or 

wilshuseng@gao.gov. 

Highlights of GAO-04-202T, a testimony 

before the House Committee on 

Government Reform 

May 6, 2004

DOD PERSONNEL CLEARANCES

Preliminary Observations Related to 

Backlogs and Delays in Determining 

Security Clearance Eligibility for Industry 

Personnel 

On the basis of our preliminary observations, long-standing backlogs 

and delays in determining security clearance eligibility for industry 

personnel continue to exist and can have adverse effects. DOD’s security 

clearance backlog for industry personnel was roughly 188,000 cases as of 

March 31, 2004. The backlog included estimates by the Defense Security 

Service (DSS)—the agency responsible for administering DOD’s personnel 

security investigations program—that consisted of 

• more than 61,000 reinvestigations (required for renewing clearances) 

that were overdue but had not been submitted to DSS, 

• over 101,000 new DSS investigations or reinvestigations that had not 

been completed within DOD’s established time frames, and 

• over 25,000 cases awaiting adjudication (a determination of clearance 

eligibility) that had not been completed within DOD’s established time 

frames. 

From fiscal year 2001 through fiscal year 2003, the average time that it took 

DOD to determine clearance eligibility for industry personnel increased by 

56 days to over 1 year. Delays in completing reinvestigations of industry 

personnel and others doing classified work can increase national security 

risks. In addition, delays in determining clearance eligibility can affect the 

timeliness, quality, and cost of contractor performance on defense contracts. 

Several impediments hinder DOD's ability to eliminate the backlog and 

decrease the amount of time needed to determine clearance eligibility for 

industry personnel. Impediments include a large number of new clearance 

requests; an increase in the proportion of requests for top secret clearances, 

which require more time to process; inaccurate workload projections for 

both the number and type of clearances needed for industry personnel; and 

the imbalance between workforces and workloads. Industrial contractors 

cited the lack of full reciprocity (the acceptance of a clearance and access 

granted by another department, agency, or military service) as an obstacle 

that can cause industry delays in filling positions and starting work on 

government contracts. Furthermore, DOD does not have an integrated, 

comprehensive management plan for addressing the backlog and delays. 

DOD is considering a number of initiatives to supplement actions that it has 

implemented in recent years to reduce the backlogs and the time needed to 

determine eligibility for a security clearance. Additional initiatives include 

(1) conducting a phased, periodic reinvestigation; (2) establishing a single 

adjudicative facility for industry; and (3) reevaluating investigative standards 

and adjudicative guidelines. GAO’s forthcoming report will provide a more 

complete discussion of these and other initiatives. 

Because of increased awareness of 

threats to national security and 

efforts to privatize federal jobs, the 

demand for security clearances for 

government and industry personnel 

has increased. Industry personnel 

are taking on a greater role in 

national security work for the 

Department of Defense (DOD) 

and other federal agencies. 

Because many of these jobs require 

access to classified information, 

industry personnel need security 

clearances. As of September 30, 

2003, industry workers held about 

one-third of the approximately 2 

million DOD-issued security 

clearances. 

Terrorist attacks have heightened 

national security concerns and 

underscored the need for a timely, 

high-quality personnel security 

clearance process. However, GAO’s 

past work found that DOD had a 

clearance backlog and other 

problems with its process. GAO 

was asked to review the clearance 

eligibility determination process 

and backlog for industry personnel. 

This testimony presents our 

preliminary observations on the 

security clearance process for 

industry personnel and describes 

(1) the size of the backlog and 

changes in the time needed to issue 

eligibility determinations, (2) the 

impediments to reducing the 

backlog and delays, and (3) some 

of the initiatives that DOD is 

considering to eliminate the 

backlog and decrease the delays. 

Later this month, we plan to issue 

our final report. 
Page 1 GAO-04-202T 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss our preliminary observations on 

the process the Department of Defense (DOD) uses to determine security 

clearance eligibility for industry personnel. 

For a variety of reasons, including an increased awareness of threats to 

our national security resulting from the terrorist attacks on the United 

States on September 11, 2001, and efforts over the past decade to privatize 

federal jobs, the demand for security clearances for both government 

employees and industry personnel has increased over the last few years. 

Individuals working for industry are playing an increasingly larger role in 

national security work conducted by DOD and other federal agencies. 

Many industry personnel hold jobs that allow them to work on classified 

programs and activities and that require access to classified information. 

To handle classified information, industry personnel must hold a security 

clearance. As of September 30, 2003, industry personnel held about 

682,000 (or about 34 percent) of the approximately 2 million DOD-issued 

security clearances. 

Terrorist attacks have heightened national security concerns and have 

highlighted the need for a timely, high-quality personnel security clearance 

process. As part of a three-stage process, DOD determines whether 

industry personnel are eligible for a security clearance by conducting a 

background investigation and adjudication (determining eligibility for 

access to classified information). However, some government and industry 

officials have recently expressed concern about the security clearance 

backlog—overdue security clearance reinvestigations1

 that have not been 

requested and new investigations and adjudications that have not been 

completed within established time frames—and the amount of time it 

takes to determine eligibility for a security clearance for industry 

personnel. 

Since at least the late 1990s, the timeliness of DOD’s personnel security 

clearance process has been at issue. As our previous work has shown, 

backlogs and delays in personnel security investigations and adjudications 

historically have been problems for DOD, and they affect industry 

 1

 Reinvestigations are conducted periodically to determine whether an individual’s security 

clearance should be renewed. 
Page 2 GAO-04-202T 

personnel as well as service members and civilian employees.2 In February 

and September 2000 testimonies before the Subcommittee on National 

Security, Veterans Affairs, and International Relations, House Committee 

on Government Reform,3

 we noted our concerns about the amount of time 

needed to obtain clearances and that DOD had historically reported a large 

backlog of overdue but not submitted reinvestigations for security 

clearances. In our February 2004 report, for example, we identified several 

impediments that hinder DOD’s ability to eliminate its security clearance 

backlog and made recommendations for decreasing the backlog and 

improving timeliness.4

 Likewise, this committee reported that DOD’s 

personnel security investigations backlog poses a threat to national 

security and recommended actions to address the backlog.5

Mr. Chairman, in June 2003, you and the Vice Chairman of this committee 

asked us to review the process DOD uses to determine security clearance 

eligibility for industry personnel. Later this month, we plan to provide you 

with a report containing the final results and our recommendations. 

Today, I will present our preliminary observations on DOD’s security 

clearance process for industry personnel. Specifically, I will discuss 

(1) the size of the backlog and changes during the last 3 fiscal years in the 

time needed to issue eligibility determinations, (2) the impediments to 

reducing the backlog and delays, and (3) some of the initiatives that DOD 

is considering to eliminate the backlog and decrease the delays. 

 2

 See U.S. General Accounting Office, DOD Personnel: More Consistency Needed in 

Determining Eligibility for Top Secret Clearances, GAO-01-465 (Washington, D.C.: 

Apr. 18, 2001); U.S. General Accounting Office, DOD Personnel: More Actions Needed 

to Address Backlog of Security Clearance Reinvestigations, GAO/NSIAD-00-215

(Washington, D.C.: Aug. 24, 2000); and U.S. General Accounting Office, DOD Personnel: 

Inadequate Personnel Security Investigations Pose National Security Risks, 

GAO/NSIAD-00-12 (Washington, D.C.: Oct. 27, 1999). 

3

 See U.S. General Accounting Office, DOD Personnel: Inadequate Personnel Security 

Investigations Pose National Security Risks, GAO/T-NSIAD-00-65 (Washington, D.C.: 

Feb. 16, 2000) and U.S. General Accounting Office, DOD Personnel: More Accurate 

Estimate of Overdue Security Clearance Reinvestigations Is Needed, 

GAO/T-NSIAD-00-246 (Washington, D.C.: Sept. 20, 2000). 

4

 See U.S. General Accounting Office, DOD Personnel Clearances: DOD Needs to 

Overcome Impediments to Eliminating Backlog and Determining Its Size, 

GAO-04-344 (Washington, D.C.: Feb. 9, 2004). 

5

 See Committee on Government Reform, Defense Security Service: The Personnel 

Security Investigations [PSI] Backlog Poses a Threat to National Security, H.R. 107-767 

(Oct. 24, 2002). 
Page 3 GAO-04-202T 

In conducting this review, we examined DOD policy guidance, regulations, 

instructions, and statistical evidence on the security clearance process 

for industry personnel. In addition, we reviewed reports by GAO, DOD, 

congressional staff, and other government entities. We also interviewed 

DOD and industry officials, observed the procedures used to process 

clearance information, and assessed the reliability of databases. We 

determined that the data for fiscal years 2001 and thereafter were 

sufficiently reliable for the purpose of our work. At the end of my 

statement is a list of related GAO products. We conducted our review 

from July 2003 through April 2004 in accordance with generally accepted 

government auditing standards. 

Long-standing backlogs and delays in determining security clearance 

eligibility for industry personnel continue to exist and can have adverse 

effects. As of March 31, 2004, DOD estimated that its security clearance 

backlog for industry personnel was roughly 188,000 cases. DOD 

identified more than 61,000 reinvestigations that were overdue but had 

not been submitted, over 101,000 backlogged investigations, and over 

25,000 backlogged adjudications. In the 3-year period from fiscal year 2001 

through fiscal year 2003, the average time that it took DOD to determine 

clearance eligibility for industry personnel increased by 56 days to over 

1 year. Delays in initiating reinvestigations for individuals working on 

classified programs and activities can increase national security risks 

while delays in determining eligibility for clearances for industry 

personnel can affect the timeliness, quality, and cost of contractor 

performance on defense contracts. Such delays prevent industry 

personnel from beginning or continuing work on classified programs 

and activities, hinder industrial contractors from hiring the most 

experienced and best qualified personnel, increase the time needed to 

complete national-security-related contracts, and increase costs to the 

federal government. 

A number of impediments hinder DOD’s ability to eliminate the backlog 

and decrease the amount of time needed to determine eligibility for 

security clearances for industry personnel. Impediments include large 

investigative and adjudicative workloads resulting from a large number of 

clearance requests in recent years; an increase in the proportion of 

requests requiring top secret clearances, which take longer and are more 

expensive to complete than secret clearances; inaccurate workload 

projections; and the imbalance between workforces and workloads. 

Industrial contractors cited the lack of full reciprocity—a policy that 

requires acceptance by an agency of an equivalent personnel security 

Summary 
Page 4 GAO-04-202T 

clearance and access granted by another agency—as an impediment that 

can cause industry contractors delays in filling positions and starting work 

on government contracts. Furthermore, DOD does not have a management 

plan to address the impediments in a comprehensive and integrated 

manner. 

DOD is considering a number of initiatives to reduce the backlog and the 

amount of time needed to determine eligibility for a security clearance. 

Among those steps that DOD is exploring are conducting a phased 

periodic reinvestigation; establishing a single adjudicative facility for 

industry; and reevaluating investigative standards and adjudicative 

guidelines. Even if these initiatives prove promising, they face obstacles—

such as the need to change investigative standards, coordinate these 

policy changes with other agencies, and ensure reciprocity—that could 

prevent their implementation or limit their use. Our May 2004 evaluative 

report will provide a more complete discussion of these and other 

initiatives. 

In March 1997, a White House memorandum implemented adjudicative 

guidelines, temporary eligibility standards, and investigative standards 

governmentwide.6

 The National Security Council is responsible for 

overseeing these guidelines and standards. Within DOD, the Office of the 

Under Secretary of Defense for Intelligence (OUSD [I]) is responsible for 

coordinating and implementing DOD-wide policies related to access to 

classified information.7

 Within OUSD (I), the Defense Security Service 

(DSS) is responsible for conducting background investigations and 

administering the personnel security investigations program for DOD and 

24 other federal agencies that allow industry personnel access to classified 

 6

 See The White House, “Implementation of Executive Order 12968,” Memorandum 

(Washington, D.C.: Mar. 24, 1997). This memorandum includes the Investigative Standards 

for Background Investigations for Access to Classified Information and Adjudicative 

Guidelines for Determining Eligibility for Access to Classified Information. It approves 

the adjudicative guidelines, temporary eligibility standards, and investigative standards 

required by Executive Order No. 12968, Access to Classified Information (Aug. 4, 1995). 

7

 Previously, this responsibility resided within the Office of the Assistant Secretary of 

Defense for Command, Control, Communications, and Intelligence. OUSD (I) was 

created in 2002 by the Bob Stump National Defense Authorization Act for Fiscal Year 2003, 

Pub. L. No. 107-314 § 901 (Dec. 2, 2002). 

Background 
Page 5 GAO-04-202T 

information.8 DSS’s Defense Industrial Security Clearance Office (DISCO) 

adjudicates cases that contain only favorable information or minor 

security issues. The Defense Office of Hearings and Appeals (DOHA) 

within DOD’s Office of General Counsel adjudicates cases that contain 

more serious security issues. 

As with military members and federal workers, industry personnel must 

obtain a security clearance to gain access to classified information, which 

is categorized into three levels: top secret, secret, and confidential. 

Individuals who need access to classified information over a long period 

are required to periodically renew their clearance (a reinvestigation). 

The time frames for reinvestigations are 5 years for top secret clearances, 

10 years for secret clearances, and 15 years for confidential clearances.9

To ensure the trustworthiness, judgment, and reliability of contractor 

personnel in positions requiring access to classified information, DOD 

relies on a three-stage personnel security clearance process that includes 

(1) determining that the position requires a clearance and, if so, submitting 

a request for a clearance to DSS, (2) conducting an initial investigation or 

reinvestigation, and (3) using the investigative report to determine 

eligibility for access to classified information—a procedure known as 

“adjudication.” Figure 1 depicts this three-stage process and the federal 

government offices that have the lead responsibility for each stage. 

 8

 Executive Order No. 10865, Safeguarding Classified Information within Industry 

(Feb. 20, 1960), which was amended by Executive Order No. 12829, National Industrial 

Security Program (Jan. 6, 1993), authorizes DOD to reach agreement with other federal 

departments and agencies to extend its regulations concerning authorizations for access to 

classified information by industry. Three federal agencies (the Department of Energy, the 

Central Intelligence Agency, and Nuclear Regulatory Commission) also may grant security 

clearances to industry personnel who work on national-security-related programs. 

9

 See Adjudicative Guidelines for Determining Eligibility for Access to Classified 

Information, 32 C.F.R. Part 147, Subpart B, Attach. A and Attach. C (2003). 
Page 6 GAO-04-202T 

Figure 1: DOD’s Personnel Security Clearance Process for Industry Personnel 

Note: Cases involving access to sensitive compartmented information (see footnote 21) are sent 

through the requesting agency’s central adjudication facility for adjudication. 

In the preinvestigation stage, the industrial contractor must determine that 

a position requires the employee to have access to classified information. 

If a clearance is needed, the industry employee completes a personnel 

security questionnaire, and the industrial contractor submits it to DSS. All 

industry requests for a DOD-issued clearance are submitted to DSS while 

requests for military members and federal employees are submitted to 

either DSS or the Office of Personnel Management (OPM). 

In the investigation stage, DSS, OPM, or one of their contractors conducts 

the actual investigation of the industry employee by using standards 

established governmentwide in 1997 and implemented by DOD in 1998.10

As table 1 shows, the type of information gathered in an investigation 

depends on the level of clearance needed and whether an initial 

investigation or a reinvestigation is required. DSS forwards the completed 

investigative report to DISCO. 

 10 See Assistant Secretary of Defense for Command, Control, Communications, and 

Intelligence, “Personnel Security Investigations and Adjudications,” Memorandum 

(Washington, D.C.: Nov. 10, 1998). In implementing the federal adjudicative guidelines, 

DOD Directive 5200.2, DOD Personnel Security Program (Apr. 9, 1999), sets forth the 

policies and procedures for granting DOD military, civilian, and industry personnel access 

to classified information. The policies and procedures for granting industrial personnel 

security clearances and adjudicative procedural guidance for appealing cases if an 

unfavorable clearance decision is reached also are contained in DOD Directive 5220.6, 

Defense Industrial Personnel Security Clearance Review Program (Apr. 20, 1999). 
Page 7 GAO-04-202T 

Table 1: Information Gathered to Determine Eligibility for a Security Clearance 

 Type of security clearance 

 Confidential or secret Top secret 

Type of information gathered 

Initial investigation or 

reinvestigation Initial investigation Reinvestigation 

1. Personnel security questionnaire: The subject’s 

self-reported answers on a paper SF-86 form or an 

electronic form 

X 

 

X X 

2. National agency check: Data from Federal Bureau 

of Investigation, military records centers, Treasury, etc. 

X 

 

X X 

3. Credit check: Data from credit bureaus where the 

subject lived/worked/attended school for at least 

6 months 

X 

 

X X 

4. Local agency checks: Data from law enforcement 

agencies where the subject lived/worked/attended 

school during past 5 years 

X 

 

X X 

5. Date and place of birth: Corroboration of 

information supplied on the personnel security 

questionnaire 

X 

 

X 

 

6. Citizenship: For individuals born outside of the 

United States, verification of U.S. citizenship directly 

from the appropriate registration authority 

X 

 

7. Education: Corroboration of most recent or 

significant claimed attendance, degree, or diploma 

X X 

8. Employment: Review of employment records 

and interviews with workplace references, such as 

supervisors and coworkers 

X X 

9. References: Data from interviews with 

subject-identified and investigator-developed leads 

X X 

10. National agency check for spouse or 

cohabitant: National agency check without fingerprint 

X X 

11. Former spouse: Data from interview(s) conducted 

with spouse(s) divorced within the last 10 years 

X X 

12. Neighborhoods: Interviews with neighbors and 

verification of residence through records check 

X X 

13. Public records: Verification of issues, such as 

bankruptcy, divorce, and criminal and civil court cases 

X X 

14. Subject interview: To collect relevant data, 

resolve significant inconsistencies, or both 

X X 

Source: DSS. 
Page 8 GAO-04-202T 

In the adjudicative stage, DISCO uses the information from the 

investigative report to determine whether an individual is eligible for a 

security clearance. If the report is determined to be a “clean” case—a case 

that contains no potential security issue or minor issues—then DISCO 

adjudicators determine eligibility for a clearance. However, if the case 

is an “issue” case—a case containing issues that might disqualify an 

individual for a clearance (e.g., foreign connections or drug- or 

alcohol-related problems)—then the case is forwarded to DOHA 

adjudicators for the clearance-eligibility decision. Regardless of which 

office determines eligibility, DISCO issues the clearance-eligibility decision 

and forwards this determination to the industrial contractor. All 

adjudications are based on 13 federal adjudicative guidelines established 

governmentwide in 1997 and implemented by DOD in 1998. 

Recent legislation could affect DOD’s security clearance process. The 

National Defense Authorization Act for Fiscal Year 2004 authorized the 

transfer of DOD’s personnel security investigative functions and more than 

1,800 investigative employees to OPM.11 However, as of March 31, 2004, 

this transfer had not taken place. The transfer can occur only after the 

Secretary of Defense certifies to Congress that certain conditions can be 

met and the Director of OPM concurs with the transfer. 

DOD’s security clearance backlog for industry personnel is sizeable, 

and the average time needed to determine eligibility for a clearance 

increased during the last 3 fiscal years to over 1 year. DSS has established 

case-completion time frames for both its investigations and adjudications. 

For investigations, the time frames range from 75 to 180 days, depending 

on the investigative requirements.12 For DISCO adjudications, the time 

frames are 3 days for initial clearances and 30 days for periodic 

reinvestigations. DOHA’s time frame is to maintain a steady workload of 

adjudicating 2,150 cases per month within 30 days of receipt. Cases 

exceeding these time frames are considered backlogged. 

 11 See Pub. L. No. 108-136, § 906 (Nov. 24, 2003). 

12 DSS’s performance goal is to complete at least 75 percent of each type of investigation 

within the specified time limits. However, monitoring of the backlog requires a 

determination of whether each investigation was completed within the time frame—not 

whether an aggregate performance goal was met for a particular type of investigation. 

Long-standing 

Backlogs and Delays 

in Determining 

Security Clearance 

Eligibility for Industry 

Personnel Continue to 

Exist and Can Have 

Adverse Effects 
Page 9 GAO-04-202T 

• Sizeable backlog continues to exist—As of March 31, 2004, the 

security clearance backlog for industry personnel was roughly 

188,000 cases. This estimate is the sum of four separate DSS-supplied 

estimates: over 61,000 reinvestigations that were overdue but had not been 

submitted, over 101,000 ongoing DSS investigations, over 19,000 cases 

awaiting adjudication at DISCO, and more than 6,300 cases awaiting 

adjudication at DOHA that had exceeded the case-completion time frames 

established for conducting them. However, as of March 31, 2004, DOHA 

independently reported that it had eliminated its adjudicative backlog. 

Moreover, the size of the total DSS-estimated backlog for industry 

personnel doubled during the 6-month period ending on March 31, 2004, as 

the comparison in table 2 shows. This comparison does not include the 

backlog of overdue reinvestigations that have not been submitted because 

DSS was not able to estimate that backlog as of September 30, 2003. 

Table 2: Comparison of Backlog Sizes As of September 30, 2003, and March 31, 2004 

Estimated number of backlogged cases 

for industry personnel Increase in backlog 

Type of backlog Sept. 30, 2003 Mar. 31, 2004 Number of cases 

Percentage of 

increase

Investigative backlog 44,600 101,000 56,400 126

Adjudicative backlog at DISCO 12,800 19,000 6,200 48

Adjudicative backlog at DOHA 4,500 6,300 1,800 40

Total 61,900 126,300 64,400 104

Sources: DSS and the Case Control Management System (data); GAO (analysis). 

Note: Although DSS provided the backlog estimates in table 2, DOHA independently reported that, as 

of March 31, 2004, it had eliminated its adjudicative backlog. 

The industry backlogs for investigations and adjudications represent about 

one-fifth of the DOD-wide backlog for investigations and adjudications as 

of September 30, 2003 (the date of the most recent DOD-wide data). On 

that date, the estimated size of the investigative backlog for industry 

personnel amounted to roughly 44,600 cases, or 17 percent of the larger 

DOD-wide backlog of approximately 270,000 cases, which included 

military members, federal employees, and industry personnel. Similarly, 

the estimated size of the adjudicative backlog for industry personnel 

totaled roughly 17,300 cases, or 19 percent of the approximately 

93,000 cases in the DOD-wide adjudicative backlog on that date. 

Furthermore, the size of the industrial personnel backlog may be 

underestimated. In anticipation of the authorized transfer of the 
Page 10 GAO-04-202T 

investigative function from DSS to OPM, DSS had opened relatively 

few cases between October 1, 2003, and March 31, 2004. More specifically, 

DSS had not opened almost 69,200 new industry personnel requests 

received in the first half of fiscal year 2004. Because these requests have 

not been opened and investigations begun, they are not part of the 188,000 

case backlog identified above. An unknown number of these cases might 

have already exceeded the set time frames for completing the 

investigation. 

• Average time to determine clearance eligibility has increased—In 

the 3-year period from fiscal year 2001 through fiscal year 2003, the 

average time that DOD took to determine clearance eligibility for industry 

personnel increased from 319 days to 375 days, an increase of 18 percent. 

(See table 3.) During fiscal year 2003, DOD took an average of more than 

1 year from the time DSS received a personnel security questionnaire to 

the time it issued an eligibility determination. From fiscal year 2001 

through fiscal year 2003, the number of days to determine clearance 

eligibility for clean cases increased from 301 days to 332 days, whereas 

the time increased for issue cases from 516 days to 615 days. 

Table 3: Average Number of Days Needed to Determine Eligibility for a Security Clearance for Industry Personnel, 

Fiscal Years 2001-3 

Average number of days to determine eligibility for a 

security clearance for industry personnel 

Fiscal year All industry cases Clean casesa Issue casesb

2003 375 332 615

2002 343 316 629

2001 319 301 516

Sources: DISCO and the Case Control Management System. 

Note: Although DSS’s case management system can provide the total elapsed time between opening 

a case and issuing the final security clearance eligibility determination, it is not capable of generating 

separate time estimates for the intermediate stages of the clearance process. Nor does it have the 

capability to identify how much time DOHA needed to adjudicate issue cases. Therefore, all of the 

time-based findings include the time period beginning when personnel security questionnaires were 

entered into the case management system and ending when DISCO notified the industrial contractor 

of the DISCO or DOHA adjudicators’ decisions to grant a clearance. 

a

Includes investigative time and DISCO review time. 

b

Includes investigative time, DISCO and DOHA review time, and additional time when some 

cases were sent back for additional investigation or were appealed after a denial or revocation of 

a clearance. 

• Backlogs and delays can have adverse effects—Delays in renewing 

security clearances for industry personnel and others who are doing 

classified work can lead to a heightened risk of national security breaches. 
Page 11 GAO-04-202T 

In a 1999 report, the Joint Security Commission II pointed out that delays 

in initiating reinvestigations create risks to national security because the 

longer the individuals hold clearances, the more likely they are to be 

working with critical information and systems.13 In addition, delays in 

determining security clearance eligibility for industry personnel can affect 

the timeliness, quality, and cost of contractor performance on defense 

contracts. According to a 2003 Information Security Oversight Office14

report, industrial contractor officials who were interviewed said that 

delays in obtaining clearances cost industry millions of dollars per year 

and affect personnel resources.15 The report also stated that delays in the 

clearance process hampered industrial contractors’ ability to perform 

duties required by their contracts and increased the amount of time 

needed to complete national-security-related contracts. Industrial 

contractors told us about cases in which their company hired competent 

applicants who already had the necessary security clearances, rather than 

individuals who were more experienced or qualified but did not have a 

clearance. Industry association representatives told us that defense 

contractors might offer monetary incentives to attract new employees 

with clearances—for example, a $15,000 to $20,000 signing bonus for 

individuals with a valid security clearance, and a $10,000 bonus to current 

employees who recruit a new employee with a clearance. In addition, 

defense contractors may hire new employees and begin paying them, but 

not be able to assign any work to them—sometimes for a year or more—

until they obtain a clearance. Contractors may also incur lost-opportunity 

costs if prospective employees decide to work elsewhere rather than wait 

to get a clearance. 

 13 See Joint Security Commission II, Report by the Joint Security Commission II 

(Aug. 24, 1999), pp. 5-6. 

14 Executive Order No. 12829, National Industrial Security Program, Jan. 6, 1993, requires 

the Director of the Information Security Oversight Office to implement and monitor the 

National Industrial Security Program and oversee agency, contractor, licensee, and grantee 

actions; review all agency implementing regulations, internal rules or guidelines; and gives 

the Director the authority to conduct periodic on-site reviews of the implementation of the 

program by each program member that has access to classified information or stores it. 

This office is part of the National Archives and Records Administration. 

15 See Information Security Oversight Office, The National Industrial Security Program, 

Industry’s Perspective: Making Progress, but Falling Short of Potential (2003). 
Page 12 GAO-04-202T 

A number of impediments hinder DOD’s efforts to eliminate the clearance 

backlog for industry personnel and reduce the time needed to determine 

eligibility for a clearance. Impediments include large investigative and 

adjudicative workloads resulting from a large number of clearance 

requests in recent years and an increase in the proportion of requests 

requiring top secret clearances, inaccurate workload projections, and the 

imbalance between workforces and workloads. The underutilization of 

reciprocity is an impediment that industrial contractors cited as an 

obstacle to timely eligibility determinations. Furthermore, DOD does not 

have a management plan that could help it address many of these 

impediments in a comprehensive and integrative manner. 

• Large number of clearance requests—The large number of clearance 

requests that DOD receives annually for industry personnel, military 

members, and federal employees taxes a process that already is 

experiencing backlogs and delays. In fiscal year 2003, DOD submitted over 

775,000 requests for investigations to DSS and OPM, about one-fifth of 

which (almost 143,000 requests) were for industry personnel. Table 4 

shows an increase in the number of DOD eligibility determinations for 

industry personnel made during each of the last 3 years.16 DOD issued 

about 63,000 more eligibility determinations for industry personnel in 

fiscal year 2003 than it did 2 years earlier, an increase of 174 percent. 

During the same period, the average number of days required to issue an 

eligibility determination for industry personnel grew by 56 days, or about 

18 percent. In other words, the increase in the average wait time was small 

compared to the increase in the number of cases. 

Table 4: Number of Clearance-Eligibility Determinations for Industry Personnel, Fiscal Years 2001-3 

 Number of clearance-eligibility determinations for industry personnel 

Fiscal year All industry cases Clean cases Issue cases

2003 99,652 87,172 12,480

2002 86,226 78,836 7,390

2001 36,370 33,294 3,076

Source: DISCO and the Case Control Management System. 

 16 The outcomes of the clearance requests are eligibility determinations, but the 

determinations may be made in the year subsequent to the year when the request 

was submitted. 

Impediments Hinder 

Elimination of the 

Backlog and 

Reduction of Time 

Needed to Determine 

Eligibility for 

a Clearance 
Page 13 GAO-04-202T 

• Increase in the proportion of requests for top secret clearances—

From fiscal year 1995 through fiscal year 2003, the proportion of all 

requests requiring top secret clearances for industry personnel grew 

from 17 to 27 percent. According to OUSD (I), top secret clearances take 

eight times more investigative effort to complete and three times more 

adjudicative effort to review than do secret clearances. The increased 

demand for top secret clearances also has budget implications for DOD. 

In fiscal year 2003, security investigations obtained through DSS cost 

$2,640 for an initial investigation for a top secret clearance, $1,591 for 

a reinvestigation of a top secret clearance, and $328 for an initial 

investigation for a secret clearance. Thus, over a 10-year period, DOD 

would spend $4,231 (in current-year dollars) to investigate and 

reinvestigate an industry employee for a top secret clearance, a cost 

13 times higher than the $328 it would require to investigate an individual 

for a secret clearance. 

• Inaccurate workload projections—Although DSS has made efforts to 

improve its projections of industry personnel security clearance 

requirements, problems remain. For example, inaccurate forecasts for 

both the number and type of security clearances needed for industry 

personnel make it difficult for DOD to plan ahead to size its investigative 

and adjudicative workforce to handle the workload and fund its security 

clearance program. For fiscal year 2003, DSS reported that the actual cost 

of industry personnel investigations was almost 25 percent higher than 

had been projected. DOD officials believed that these projections were 

inaccurate primarily because DSS received a larger proportion of 

requests for initial top secret investigations and reinvestigations. Further 

inaccuracies in projections may result when DOD fully implements a new 

automated adjudication tracking system, which will identify overdue 

reinvestigations that have not been submitted DOD-wide. 

• Imbalance between workforces and workloads—Insufficient 

investigative and adjudicative workforces, given the current and projected 

workloads, are additional barriers to eliminating the backlog and reducing 

security clearance processing times for industry personnel. DOD partially 

concurred with our February 2004 recommendation to identify and 

implement steps to match the sizes of the investigative and adjudicative 

workforces to the clearance request workload. According to an OPM 

official, DOD and OPM together need roughly 8,000 full-time-equivalent 

investigative staff to eliminate the security clearance backlogs and deliver 
Page 14 GAO-04-202T 

timely investigations to their customers.17 In our February 2004 report, we 

estimated that DOD and OPM have around 4,200 full-time-equivalent 

investigative staff who are either federal employees or contract 

investigators.18

In December 2003, advisors to the OPM Director expressed concerns 

about financial risks associated with the transfer of DSS’s investigative 

functions and 1,855 investigative staff authorized in the National 

Defense Authorization Act for Fiscal Year 2004. The advisors therefore 

recommended that the transfer not occur, at least during fiscal year 2004. 

On February 6, 2004, DSS and OPM signed an interagency agreement that 

leaves the investigative functions and DSS personnel in DOD and provides 

DSS personnel with training on OPM’s case management system and 

investigative procedures as well as access to that system. According to our 

calculations, if all 1,855 DSS investigative employees complete the 1-week 

training program as planned, the loss in productively will be equivalent to 

35 person-years of investigator time. Also, other short-term decreases in 

productivity will result while DSS’s investigative employees become 

accustomed to using OPM’s system and procedures. 

Likewise, an adjudicative backlog of industry personnel cases 

developed because DISCO and DOHA did not have an adequate number 

of adjudicative personnel on hand. DISCO and DOHA have, however, 

taken steps to augment their adjudicative staff. DISCO was recently 

given the authority to hire 30 adjudicators to supplement its staff of 

62 nonsupervisory adjudicators. Similarly, DOHA has supplemented its 

23 permanent adjudicators with 46 temporary adjudicators and, more 

recently, has requested that it be able to hire an appropriate number of 

additional permanent adjudicators. 

• Reciprocity of access underutilized—While the reciprocity of security 

clearances within DOD has not been a problem for industry personnel, 

reciprocity of access to certain types of information and programs within 

the federal government has not been fully utilized, thereby preventing 

some industry personnel from working and increasing the workload on 

 17 OPM has estimated that DOD and OPM account for 80 percent of the investigations 

conducted for the federal government. 

18 See GAO-04-344. 
Page 15 GAO-04-202T 

already overburdened investigative and adjudicative staff.19 According to 

DOD and industry officials, a 2003 Information Security Oversight Office 

report on the National Industrial Security Program,20 and our analysis, 

reciprocity of clearances appears to be working throughout most of DOD. 

However, the same cannot be said for access to sensitive compartmented 

information and special access programs21 within DOD or transferring 

clearances and access from DOD to some other agencies. Similarly, a 

recent report by the Defense Personnel Security Research Center 

concluded that aspects of reciprocity for industrial contractors appear not 

to work well and that the lack of reciprocity between special access 

programs was a particular problem for industry personnel, who often 

work on many of these programs simultaneously.22

Industry association officials told us that reciprocity of access to certain 

types of information and programs, especially the lack of full reciprocity in 

the intelligence community, is becoming more common and one of the top 

concerns of their members. One association provided us with several 

examples of access problems that industry personnel with DOD-issued 

security clearances face when working with intelligence agencies. For 

example, the association cited different processes and standards used by 

intelligence agencies, such as guidelines for (1) the type of investigations 

and required time frames, (2) the type of polygraph tests, and (3) not 

accepting adjudication decisions made by other agencies. 

 19 Reciprocity, which is required by Executive Order No. 12968, is a policy that requires 

background investigations and eligibility determinations conducted under the order be 

mutually and reciprocally accepted by all agencies, except when an agency has substantial 

information indicating that an employee may not satisfy the standards under this order. 

Reciprocity also involves the ability to transfer (1) an individual’s existing, valid security 

clearance and (2) access from one department, agency, or military service to another or 

from the federal government to the private sector (and vice versa) when the individual 

changes jobs without having to grant another clearance or access. 

20 See Information Security Oversight Office, The National Industrial Security Program, 

Industry’s Perspective: Making Progress, but Falling Short of Potential (2003). 

21 Sensitive compartmented information is classified intelligence information derived from 

intelligence sources, methods, or analytical processes, which is handled by systems 

established by the Director of Central Intelligence. A special access program is a sensitive 

program that imposes need-to-know and access controls beyond those normally provided 

for access to confidential, secret, or top secret information. 

22 See Defense Personnel Security Research Center, Reciprocity: A Progress Report, 

PERSEREC Technical Report 04-2 (Monterey, Calif.: Apr. 1, 2004). 
Page 16 GAO-04-202T 

In addition to the reciprocity concerns relating to access to sensitive 

compartmented information and special access programs, industry 

officials identified additional reciprocity concerns. First, DSS and 

contractor association officials told us that some personnel with an 

interim clearance could not start work because an interim clearance does 

not provide access to specific types of national security information, such 

as sensitive compartmented information, special access programs, North 

Atlantic Treaty Organization data, and restricted data. 23 Second, 

intelligence agencies do not always accept clearance reinstatements and 

conversions (e.g., a security clearance may be reactivated depending on 

the recency of the investigation and the length of time since the clearance 

was terminated). Third, the Smith Amendment—with exceptions—

prohibits an individual with a clearance from being eligible for a 

subsequent DOD clearance if certain prohibitions (e.g., unlawful user of a 

controlled substance) are applicable.24

• Lack of overall management plan—Finally, DOD has numerous plans 

to address pieces of the backlog problem but does not have an overall 

management plan to eliminate permanently the current investigative and 

adjudicative backlogs, reduce the delays in determining clearance 

eligibility for industry personnel, and overcome the impediments that 

could allow such problems to recur. These plans do not address process 

wide objectives and outcome-related goals with performance measures, 

milestones, priorities, budgets, personnel resources, costs, and potential 

obstacles and options for overcoming the obstacles. 

 23 Under the Atomic Energy Act of 1954 (as amended), the term “restricted data” means all 

data (information) concerning the (1) design, manufacture, or utilization of atomic 

weapons, (2) the production of special nuclear material, or (3) the use of special nuclear 

material in the production of energy, but shall not include data declassified or removed 

from the restricted data category pursuant to § 142 of the Act. Pub. L. No. 83-703 § 11 

(Aug. 30, 1954), codified at 42 U.S.C. § 2014. 

24 See Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, 

Pub. L. No. 106-398, § 1071 (Oct. 30, 2000) (codified at 10 U.S.C. § 986). 
Page 17 GAO-04-202T 

DOD and industry association officials have suggested several initiatives 

to reduce the backlog and delays in issuing eligibility for a security 

clearance. They indicated that these steps could supplement actions that 

DOD has implemented in recent years or has agreed to implement as a 

result of our recommendations or those of others. Even if positive effects 

would result from these initiatives, other obstacles, such as the need to 

change investigative standards, coordinate these policy changes with other 

agencies, and ensure reciprocity, could prevent their implementation or 

limit their use. Today, I will discuss three of the suggested initiatives. Our 

final report to you will provide a more complete evaluation of these and 

other initiatives. 

• Conducting a phased periodic reinvestigation—A phased approach to 

periodic reinvestigations for top secret clearances involves conducting a 

reinvestigation in two phases; the second phase would be conducted only 

if potential security issues were identified in the initial phase. Phase 1 

information is obtained through a review of the personnel security 

questionnaire, subject and former spouse interviews, credit checks, a 

national agency check on the subject and former spouse or current 

cohabitant, local agency checks, records checks, and interviews with 

workplace personnel. If one or more issues are found in phase 1, then 

phase 2 would include all of the other types of information gathered in the 

current periodic reinvestigation for a top secret investigation. Recent 

research has shown that periodic reinvestigations for top secret 

clearances conducted in two phases can save at least 20 percent of the 

normal effort with almost no loss in identifying critical issues for 

adjudication.25 According to DSS, this initiative is designed to use the 

limited investigative resources in the most productive manner and reduce 

clearance-processing time by eliminating the routine use of low-yield 

information sources on many investigations and concentrating 

information-gathering efforts on high-yield sources. While analyses have 

not been conducted to evaluate how the implementation of phasing would 

affect the investigative backlog, the implementation of phasing could be a 

factor in reducing the backlog by decreasing some of the hours of 

fieldwork required in some reinvestigations. Even if additional testing 

confirms promising earlier findings that the procedure very rarely fails 

to identify critical issues, several obstacles, such as noncompliance 

with existing governmentwide investigative standards and reciprocity 

 25 See Defense Personnel Security Research Center, A New Approach to the SSBI-PR: 

Assessment of a Phased Reinvestigation, PERSEREC Technical Report 01-6 (Monterey, 

Calif.: Oct. 29, 2001) and Implementation of the Phased SSBI-PR at DSS: An Evaluation 

with Recommendations, PERSEREC Technical Report 04-X (Monterey, Calif.: in press). 

DOD Is Considering 

Several Initiatives to 

Decrease the Backlog 

and Time Period 

Needed to Obtain 

Eligibility for 

a Clearance 
Page 18 GAO-04-202T 

problems, could prevent the implementation or limit the use of 

this initiative. 

• Establishing a single adjudicative facility for industry—Under this 

initiative, DOD would consolidate DOHA’s adjudicative function with that 

of DISCO’s to create a single adjudicative facility for all industry 

personnel cases. At the same time, DOHA would retain its hearings and 

appeals function. According to OUSD (I) officials, this consolidation 

would streamline the adjudicative process for industry personnel and 

make it more coherent and uniform. A single adjudicative facility would 

serve as the clearinghouse for all industrial contractor-related issues. As 

part of a larger review of DOD’s security clearance processes, DOD’s 

Senior Executive Council is considering this consolidation. An OUSD (I) 

official told us that the consolidation would provide greater flexibility in 

using adjudicators to meet changes in the workload and could eliminate 

some of the time required to transfer cases from DISCO and to DOHA. 

If the consolidation occurred, DISCO officials said that their operations 

would not change much, except for adding adjudicators. On the other 

hand, DOHA officials said that the current division between DISCO and 

DOHA of adjudicating clean versus issue cases works very well and that 

combining the adjudicative function for industry into one facility could 

negatively affect DOHA’s ability to prepare denials and revocations of 

industry personnel clearances during appeals. They told us that the 

consolidation would have very little impact on the timeliness and quality 

of adjudications. 

• Evaluation of the investigative standards and adjudicative 

guidelines—This initiative would involve an evaluation of the 

investigative standards used by personnel security clearance investigators 

to help identify requirements that do not provide significant information 

relevant for adjudicative decisions. By eliminating the need to perform 

certain tasks associated with these requirements, investigative resources 

could be used more efficiently. For example, DSS officials told us that less 

than one-half of one percent of the potential security issues identified 

during an investigation are derived from neighborhood checks; however, 

this information source accounts for about 14 percent of the investigative 

time. The modification of existing investigative standards would involve 

using risk management principles based on a thorough evaluation of the 

potential loss of information. Like a phased periodic reinvestigation, this 

initiative would require changes in the governmentwide investigative 
Page 19 GAO-04-202T 

standards. In addition, the evaluation and any suggested changes would 

need to be coordinated within DOD, intelligence agencies, and others. 

Mr. Chairman, this concludes my prepared statement. I will be happy to 

respond to any questions you or other Members of the committee may 

have at this time. 
Page 20 GAO-04-202T 

Gregory C. Wilshusen, (202) 512-6244 

Jack E. Edwards, (202) 512-8246 

Individuals making key contributions to this statement include 

Mark A. Pross, James F. Reid, William J. Rigazio, and Nancy L. Benco. 

Appendix I: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Acknowledgments 
Page 21 GAO-04-202T 

Industrial Security: DOD Cannot Provide Adequate Assurances That Its 

Oversight Ensures the Protection of Classified Information. GAO-04-332. 

Washington, D.C.: March 3, 2004. 

DOD Personnel Clearances: DOD Needs to Overcome Impediments 

to Eliminating Backlog and Determining Its Size. GAO-04-344. 

Washington, D.C.: February 9, 2004. 

DOD Personnel: More Consistency Needed in Determining Eligibility 

for Top Secret Security Clearances. GAO-01-465. Washington, D.C.: 

April 18, 2001. 

DOD Personnel: More Accurate Estimate of Overdue Security Clearance 

Reinvestigation Is Needed. GAO/T-NSIAD-00-246. Washington, D.C.: 

September 20, 2000. 

DOD Personnel: More Actions Needed to Address Backlog of Security 

Clearance Reinvestigations. GAO/NSIAD-00-215. Washington, D.C.: 

August 24, 2000. 

DOD Personnel: Weaknesses in Security Investigation Program Are 

Being Addressed. GAO/T-NSIAD-00-148. Washington, D.C.: April 6, 2000. 

DOD Personnel: Inadequate Personnel Security Investigations Pose 

National Security Risks. GAO/T-NSIAD-00-65. Washington, D.C.: 

February 16, 2000. 

DOD Personnel: Inadequate Personnel Security Investigations 

Pose National Security Risks. GAO/NSIAD-00-12. Washington, D.C.: 

October 27, 1999. 

Background Investigations: Program Deficiencies May Lead DEA to 

Relinquish Its Authority to OPM. GAO/GGD-99-173. Washington, D.C.: 

September 7, 1999. 

Military Recruiting: New Initiatives Could Improve Criminal History 

Screening. GAO/NSIAD-99-53. Washington, D.C.: February 23, 1999. 

Executive Office of the President: Procedures for Acquiring Access 

to and Safeguarding Intelligence Information. GAO/NSIAD-98-245. 

Washington, D.C.: September 30, 1998. 

Related GAO Products 
Page 22 GAO-04-202T 

Privatization of OPM’s Investigations Service. GAO/GGD-96-97R. 

Washington, D.C.: August 22, 1996. 

Cost Analysis: Privatizing OPM Investigations. GAO/GGD-96-121R. 

Washington, D.C.: July 5, 1996. 

Personnel Security: Pass and Security Clearance Data for the 

Executive Office of the President. GAO/NSIAD-96-20. Washington, D.C.: 

October 19, 1995. 

Privatizing OPM Investigations: Perspectives on OPM’s Role in 

Background Investigations. GAO/T-GGD-95-185. Washington, D.C.: 

June 14, 1995. 

Background Investigations: Impediments to Consolidating 

Investigations and Adjudicative Functions. GAO/NSIAD-95-101. 

Washington, D.C.: March 24, 1995. 

Security Clearances: Consideration of Sexual Orientation in the 

Clearance Process. GAO/NSIAD-95-21. Washington, D.C.: March 24, 1995. 

Personnel Security Investigations. GAO/NSIAD-94-135R. 

Washington, D.C.: March 4, 1994. 

Nuclear Security: DOE’s Progress on Reducing Its Security Clearance 

Work Load. GAO/RCED-93-183. Washington, D.C.: August 12, 1993. 

Personnel Security: Efforts by DOD and DOE to Eliminate 

Duplicative Background Investigations. GAO/RCED-93-23. 

Washington, D.C.: May 10, 1993. 

DOD Special Access Programs: Administrative Due Process Not 

Provided When Access Is Denied or Revoked. GAO/NSIAD-93-162. 

Washington, D.C.: May 5, 1993. 

Administrative Due Process: Denials and Revocations of Security 

Clearances and Access to Special Programs. GAO/T-NSIAD-93-14. 

Washington, D.C.: May 5, 1993. 
Page 23 GAO-04-202T 

Security Clearances: Due Process for Denials and Revocations by 

Defense, Energy, and State. GAO/NSIAD-92-99. Washington, D.C.: 

May 6, 1992. 

Due Process: Procedures for Unfavorable Suitability and Security 

Clearance Actions. GAO/NSIAD-90-97FS. Washington, D.C.: April 23, 1990. 

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